Category: Analysis

The involvement of numerous foreign actors on all sides of the Yemen war has not changed the fact that fundamentally the conflict remains tied to local dynamics. This is particularly true with regard to the Houthis, the militant group currently controlling much of Yemen’s north and facing off against forces associated with the internationally recognized Yemeni government and the Saudi-led military coalition.

The administration of United States President Donald Trump has been a vociferous opponent of Iran – along with its Gulf Arab allies and the Yemeni government – and has advanced a conception of the Houthis as agents of Iran and a policy that aims to “hit Iran in Yemen.” Hawkish elements of the US Republican party and its supporters have also reinforced an understanding of the Houthis as one-dimensional Iranian pawns, framing them solely in regional sectarian terms.

This, however, obscures complex reality: the Houthis are a home-grown Yemeni group with popular support, self-sustaining social and financial networks, an independent leadership whose primary considerations are local power dynamics, and an affinity with Iran based far more in politics than religion. Simultaneously for Tehran, the ongoing Yemen conflict and the Houthis have provided a convenient, low-cost means to harass their main Gulf opponent, Saudi Arabia.

Whether the Trump administration intends to pursue war or peace, failing to understand the motivations, actions and nature of the Houthis lays the groundwork for flawed foreign policy decision making, and makes it more difficult to exert political, diplomatic or even military pressure on the group.

Indeed, a policy that further isolates the Houthis internationally would likely push the group further under the influence of Tehran. As well, if the US government sees the Houthis as a proxy target for Iran, Iranian military planners will be highly incentivized to back the Houthis more substantially, given that the Iranians would have little to lose themselves, while their opponents – the US and Saudi Arabia – would be risking a great deal. Increased Iranian support for the Houthis would in turn elevate the security risks for Saudi Arabia.

Trump’s consistent framing of the Yemen conflict as the product of Iranian malfeasance also reduces Washington’s ability rally the international community into a united front regarding the conflict, or to pressure the main warring parties back to the negotiating table.

Rather than isolating the Houthis further, US diplomatic engagement presents a more promising option, as the Houthis have responded positively to the direct talks previously entered into with both Saudi Arabia and US officials.

Introduction: Yemen “peripheral” to current US foreign policy

United States President Donald Trump has been a vocal opponent of the previous administration’s policy regarding Iran, and antagonistic toward Tehran generally, since his election campaign. This has manifested in various ways: Trump’s criticism of the Joint Comprehensive Plan of Action (JCPOA), the so-called “Iran nuclear deal” brokered under former President Barack Obama; his fulminations against Tehran for backing various militia groups in the Middle East, as well as Trump’s public indignation regarding the rhetoric Iranian officials have directed towards US allies in the region.1

Even while the Trump administration’s broader Middle East policy has appeared somewhat inconsistent thus far, the White House has been fairly undeviating in its condemnation of perceived Iranian interference across the region. In this regard the Houthi movement in Yemen, and Iranian support for the group, has clearly been on the Trump administration’s radar. Such was on display on December 14, 2017, when the US Ambassador to the United Nations, Nikki Haley, staged a media event at a military base in Washington, DC. There she unveiled a raft of weapons allegedly manufactured in Iran and recovered by the US’ Gulf allies. These included missiles, drones, anti-tank weapons, among other items which, Haley said, testified to Iran “fanning the flames” of Middle East conflict.2 The centerpieces of the exhibition were the reassembled pieces of two missiles the Houthis had purportedly fired into Saudi Arabia – one of which had come close to hitting Riyadh’s King Khalid International Airport on November 4, 2017; Saudi authorities have claimed their air defence systems shot it down.

“The weapons might as well have had ‘Made in Iran’ stickers all over” them, said Haley, asserting that Tehran was in violation of the current United Nations arms embargo on Yemen. A UN panel of experts, which issued a report regarding the same missile fragments on November 24, stated that while they bore a resemblance to the Iranian-manufactured Qiam-1 missile, there was “no evidence as to the identity of the broker or supplier.”3 The missiles also contained an American-manufactured component.

Notable in the Trump administration’s escalating allegations against Iran and its involvement in Yemen is that discussions concerning Yemen itself have been almost entirely absent. In the words of several US diplomatic officials who spoke privately on the matter, Yemen is “peripheral” in current US policy making. This, at a time when Yemen constitutes the world’s largest humanitarian crisis, Washington is deeply mired in the country’s civil war through military, logistics and intelligence support for the Saudi-led coalition intervening in the conflict, and US counterterrorism operations in Yemen – that began under President George W. Bush in 2002 – have never been more robust. The US’ forthcoming foreign policy actions related to Yemen will thus profoundly impact the country and its ongoing conflict, yet such is blatantly missing from White House considerations.

Intersections between the Houthis, Iran and the US – A brief overview

The Houthi rebel group emerged in the early 2000s out of a movement called The Believing Youth, a group focused on the revival of Zaidism, a brand of Shia Islam found nearly exclusively in northern Yemen. From the start the Houthis have been unabashedly anti-American, which as an ideological tenet has functioned as a basis for mobilization. The writings of key Houthi figures have framed US influence in the region as deeply malign, blaming it for the proliferation of Saudi-backed Sunni Islamist ideologies that have spread in the traditional Zaidi heartland.

In the movement’s nascent period, founder Hussein al-Houthi’s vociferous criticism of the US war in Iraq and then-president Ali Abdullah Saleh’s alliance with Washington earned al-Houthi both popular support and the ire of the government in Sana’a. Subsequent Yemeni Armed Forces (YAF) operations in northern Yemen against al-Houthi and his followers lead to his death in 2004 and sparked the Sa’ada Wars – a series of six armed conflicts between the YAF and the Houthis that lasted until 2010.4

Aiming to woo Saleh into counterterrorism cooperation against Al Qaeda in the Arabian Peninsula (AQAP), the US did little to dissuade the YAF’s counter-insurgency operations against the Houthis. Simultaneously, the Houthis’ vociferous anti-Americanism and anti-Semitism – epitomized by their signature chant, “God is great, death to America, death to Israel, damn the Jews, victory to Islam,” – did little to endear them to the Americans; nor did their alleged ties to Iran.

While cast as Iranian proxy forces by Saleh and his allies, US embassy cables from Sana’a at the time revealed that American officials saw little evidence of direct Iranian support for the Houthis beyond overly positive media coverage.5 Importantly, the ideological affinity between Tehran and the Houthis was based far more in politics than religion; seeing themselves as warriors against tyranny, the Houthi held Iran in esteem for standing against the perceived injustices of the Saudi, American and Israeli governments.6 At the same time, the Zaidi school of Islam can be viewed as being ideologically between Sunni and Shia – in many ways bearing more in common with Sunni Islam – and significantly distinct from the Twelver Shiism most prominent in Iran.

As the Sa’ada conflicts continued, however, the Iranian government came to see the Houthis as an opportunity to pressure Saudi Arabia, with Tehran ramping up the media rhetoric and increasing its networking with the Houthis. In 2011, popular protests against President Saleh – the Yemeni manifestation of the so-called ‘Arab Spring’ – eventually lead to him stepping down and handing the presidency to his deputy, Abdu Rabbu Mansour Hadi; following this, Iranian-Houthi interactions came to include limited financial support and military training.7 Houthi military forces entered Sana’a in September 2014 – backed by Saleh-allied troops – leading to the government being deposed and Hadi fleeing the capital in January 2015; the next month the Houthis signed a memorandum of understanding on air transport cooperation with Iran, allowing the two countries to undertake direct flights between Sana’a and Tehran for the first time.8

While the Houthis have largely shunned direct contact with the US, the Obama administration regarded them as part of Yemen’s societal fabric that should be included in any political process, in particular post-2011. Following the Houthi takeover of Sana’a in September 2014, the US established a system of coordination with the group, largely regarding stabilization and counterterrorism matters.9US officials have also, on occasion, had direct contact with some Houthi leaders, particularly with regards to the ongoing peace negotiations.10 Washington has also on several occasions successfully negotiated the release of American citizens held by the Houthis.11

None of this, however, is to say that there was amity been between the two. Beyond ideology, rhetoric and the Iranian ties, the Houthis overthrew a government closely allied to the US; one that coordinated with the US on key counterterrorism matters to an even greater extent than Saleh.12 Simultaneously, even while recognizing American power and the need to negotiate with the US, the Houthis still saw Washington as essentially a destructive force in the region.

Construction of the Iran-Houthi narrative in the US

Although the US is deeply enmeshed in the Yemen conflict, the country was barely mentioned during the 2016 US presidential campaign. When Trump did mention Yemen, his remarks usually cast the country as indicative of two nodes: first, the Obama administration’s alleged failure to properly respond to the ‘Arab Spring’ and its aftershocks, and, second, the spread of nefarious Iranian influence in the Middle East in the wake of the Iran nuclear deal. In both regards, these stances put Trump within mainstream Republican Party foreign policy sentiments, irregardless of his ‘outsider’ status and general frequent expressions of disdain for ‘the establishment’.

While Obama’s policy toward Yemen was subject to little sustained or significant scrutiny for most of his time in office – save from a small number of progressive Democrats and the libertarian wing of the Republican party – it suddenly hit center stage in 2014, following two back-to-back events. The first was Obama’s declaration that the US counterterrorism strategy in Yemen served as a model for the wider fight against the Islamic State in Iraq and Syria (ISIS); US-Yemen counterterrorism and collaboration, Obama and administration officials argued, presented a model,low-footprint military operation in the region, pairing US military airpower with the intelligence potential of local ground forces.13 The second was the overthrow of the internationally recognized – and US-backed – government of President Hadi in Yemen, an embarrassing turn of events for Obama who had previously described Yemen’s political transition post-2011 as a monumental success and a model to emulate elsewhere.14

The failed political transition and the ousting of the internationally recognized government from Sana’a presented a golden opportunity for US Republicans and their supporters to critique Obama. A key US ally had been overthrown by anti-American rebels – something that served to epitomize, for some, the administration’s poor judgement in reacting to the Arab Spring. One indicative March 2015 Heritage Foundation commentary bluntly cast Yemen as joining Obama’s list of “Middle East disasters,” ridiculing the “success story” claim; another polemic National Review commentary described Yemen’s chaos as symptomatic of the fruits of Obama’s alleged Jihadist sympathies.15

The critiques were far from unique to conservative media: In the wake of the Hadi government collapse, numerous commentators from across partisan lines disparaged the so-called ‘Yemen model’.16 Its failure was compounded by the humiliating nature with which US troops and embassy staff were forced to evacuate the capital, in many cases leaving behind equipment that was eventually seized by the Houthis.

Throughout 2014 and 2015, the narrative of how Obama’s Yemen model failed began dovetailing with criticisms of the administration’s Iran policy, specifically that Obama being “weak” on Iran had paved the way for the events in Yemen. This cross-pollination of narratives raised consternation within the right-wing, and even some moderates in the American foreign policy establishment, regarding the talks that led to the JCPOA. Importantly, this worldview casts the Houthis as beholden to Tehran and extensions of Iranian power, rather than an indigenous Yemeni movement acting autonomously based on its own vested interests.

The framing of Yemen through the prism of Iran is apparent in scores of commentary articles from the time regarding Houthi military advances; in most cases, the focus was regional politics while actual events in Yemen were treated as almost peripheral to the larger narrative. One particularly indicative Washington Times article published on January 23, 2015 opens by writing that:

The surge in Yemen this week by Shiite Muslim militants represents what some national security insiders are calling a “huge victory” for Iran, just as the Obama administration faces criticism for being too lenient in nuclear talks with the Islamic republic and appears — at least tacitly — to be coordinating with Tehran against Sunni terrorists in Iraq.17

Such thinking serves to elide much of the nuance of the Yemen conflict, all the while subsuming the differences between the political calculations, ideological motivations and strategic implications of three widely disparate happenings – the Houthi military advance, ‘Iran deal’ negotiations and US counterterrorism operations in Iraq. Perhaps ironically, the caricature of Iran as the hand behind all ills in the Middle East was fed by Iranian hardliners themselves. Iranian member of parliament Ali Reza Zakani, for instance, stated that the Houthi takeover of Sana’a meant that the Iranians controlled four regional capitals — Sana’a, Damascus, Beirut and Baghdad – and that Saudi Arabia was under imminent threat.18

Zakani’s statements were given wide play in both the Gulf and conservative US media which, along with other dramatic claims of Iranian expansionism, served the internal narratives of hardline Iranian leaders, hawkish Gulf rulers and anti-Obama Republicans, albeit, to different ends. Right-wing American pundits and many Gulf Arab commentators appeared to mirror each other’s statements, both speaking about the need to push back the Houthis to counter Iran.19 Both characterized the Houthis as an “Iran-backed Shia” grouping, effectively undermining any wider analysis of a rebel group’s overthrow of a standing government that many in the country viewed as illegitimate.20 Some American commentators went further, reducing the Yemen conflict to another example of the evils of Islam, tying Yemen’s failed government and collapsing state to the Obama administration’s inability to understand the “radical Islamist threat.”

Less bombastic and more nuanced analysis did appear in conservative outlets as well; for instance, both American Enterprise Institute (AEI) and Cato Institute-affiliated writers produced articles that offered depth and informed perspective of the Yemen crisis. Nonetheless, on the whole, two themes were reproduced in association so consistently that they became established as conventional wisdom: Obama’s failed policy had handed Yemen to Iran.

In that regard, Trump’s statements during the presidential campaign were within the GOP mainstream. While the few remarks he made on Yemen were vague – and at times almost baffling – the themes within them fell in line with what would have been expected from a more conventional candidate. This was the case, for example, for his much-maligned comments during a campaign speech in January 2016:

Now they’re going into Yemen, and if you look at Yemen, take a look… they’re going to get Syria, they’re going to get Yemen, unless… trust me, a lot of good things are going to happen if I get in, but let’s just sort of leave it the way it is. They get Syria, they get Yemen. Now they didn’t want Yemen, but you ever see the border between Yemen and Saudi Arabia? They want Saudi Arabia. So what are they going to have? They’re gonna have Iraq, they’re gonna have Iran, they’re gonna have Iraq, they’re gonna have Yemen, they’re gonna have Syria, they’re gonna have everything!21

Many commentators have focused on the mangled language – which is indeed confusingly phrased and needlessly verbose – however, the statement also provides insight into Trump’s framing of developments in Yemen: in short, that an expansionist Iran had taken advantage of chaos in the country, putting itself in a position to threaten a key US ally, Saudi Arabia. The wording may have been inelegant, but nonetheless, it fell well within the mainstream of his party; indeed, it echoed the rhetoric and policy prescriptions of many Republican elites who opposed Trump.

Trump’s hawkish posturing on Iran, Houthis

In May 2015 the Iran Nuclear Agreement Review Act (INARA) was made law, giving the US Congress a degree of oversight of the Iran nuclear deal.22 The INARA requires the president to publicly certify every 90 days that Iran is in technical compliance with its commitments under the JCPOA. Should the president not give this certification, Congress then has a 60-day window in which it is able to rapidly re-impose economic sanctions on Iran, thus breaking the nuclear agreement.

On October 13, 2017, some nine months into his presidency and against the advice of many of his key advisors, Trump announced that he would not certify the Iran deal.23 In a wide-ranging speech, Trump slammed Iran as a “terror state,” condemning its activities throughout the Middle East and the wider world.24 Trump directly noted Yemen, accusing Iranian government of “fueling” the ongoing civil war. This stance was echoed in a press statement released to accompany his announcement.25 In it, Trump cast the Houthis as tools of the Iranian Revolutionary Guard Corps (IRGC).

“In Yemen,” it reads, “the IRGC has attempted to use the Houthis as puppets to hide Iran’s role in using sophisticated missiles and explosive boats to attack innocent civilians in Saudi Arabia and the United Arab Emirates, as well as to restrict freedom of navigation in the Red Sea.”26

Unsurprisingly, Saudi Arabia, the UAE – the leading partner with Saudi Arabia in the military coalition – and the internationally recognized Yemeni government were pleased with Trump’s words, greeting them as a welcome change from Obama administration policies. While the US under Obama firmly backed the Saudi-led coalition’s operations against the Houthis – and, indeed, provided crucial military support – many Gulf and Yemeni officials grew resentful of what they saw as former Secretary of State John Kerry’s overhanded attempts to push the internationally recognized government to agree to peace terms. Many spokespeople of the Yemeni government publically slammed Kerry, accusing him of bias. In contrast, Yemeni officials characterized Trump’s October 13 statements as sending “positive signals.”27

These remarks were also the most blunt iteration of a Trump stance regarding Yemen, though they were far from the first time the president or members of his administration had made confrontational statements eluding to potential escalation of US involvement in Yemen to confront Iran. Shortly after Trump took office, the newly installed National Security Advisor General Michael Flynn (since resigned) said Iran was being put “on notice,” bluntly labeling the Houthis an Iranian “proxy terrorist group.”28 These remarks came in parallel with increased US military activity in Yemen through counterterrorism operations against AQAP, all of which indicated the Trump administration’s new hawkish approach.29 US government officials in Washington, DC, speaking privately, echoed this assessment, reporting that administration officials had stated their intent to go after “Iranian military targets” in Yemen in operations similar to those against ISIS in Iraq and Syria.30

All the while, Trump-friendly pundits have continued the chorus of claims that Yemen represents a forum for pushing back Iran expansionism. Many of these voices have gone as far as to argue for US involvement in any potential Saudi-led military coalition operation against the Houthi-held port of Hudaydah. Not only does such line of thinking dismiss the likely catastrophic humanitarian impact of such as attack – given that the vast majority of the country’s basic necessities are imported through Hudaydah port – but it casts the importance of the attack as beyond Yemen, in “countering” Iran. In one particularly indicative Breitbart piece published following Trump’s inaugural foreign trip to Riyadh in May 2017, the author posits US support for the Hudaydah offensive as a near necessity, as leaving it in the hands of the Houthis risked fulfilling an “Armageddon prophecy.”31

Beyond rhetoric, however, there has yet to be any decisive shift in US actions regarding Yemen. Following battles in Sana’a between the Houthis and forces loyal to former President Ali Abdullah Saleh at the end of November 2017 – leading to Saleh’s death early the next month – coalition-backed forces made new gains against the Houthis along Yemen’s Red Sea coast toward Hudaydah; there is no evidence, however, of direct US support for this offensive. Simultaneously, key administration officials, such as Secretary of Defense James Mattis and Secretary of State Rex Tillerson, have continued to support the renewal of peace talks.

Notably, in a surprise about face in Trump’s otherwise unwavering support for the Saudi-led coalition, the White House released a statement on December 6 calling on Riyadh to “completely allow food, fuel, water, and medicine to reach the Yemeni people who desperately need it” – a reference to the Saudi blockade of northern Yemen that is crippling commercial and humanitarian imports and exposing millions of people to potential famine.32 While ostensibly a humanitarian appeal, many observers doubted the move indicated a US policy shift; rather they saw it as Trump’s retribution against Riyadh for criticizing his announcement, days earlier, to move the US embassy in Israel to Jerusalem.

Even if Trump’s otherwise hawkish posturing regarding Iran and Yemen remains at the level of rhetoric, however, it could still prove problematic: casting the Houthis as one-dimensional Iranian pawns and dismissing dynamic reality obscures analysis of developments on the ground and opportunities for conflict de-escalation that may emerge. Simultaneously, Trump’s anti-Iran vitriol empowers hardline actors on all sides of the conflict who have a vested interest in seeing the war continue.

Looking ahead: The implications of misrepresenting the Houthis

Regardless of the involvement of foreign actors on all sides of the war, Yemen’s conflict remains fundamentally tied to internal dynamics. This is particularly true of the Houthis and their actions; despite their ties with and backing from Iran, Houthi leaders’ fundamental consideration is local power dynamics.33 Casting the Houthis as Iranian pawns and framing them solely in regional sectarian terms, with little identity otherwise, ignores the factors motivating Houthi supporters and elides the group’s ideology and decision-making process.

Whether the US administration intends to pursue war or peace, failing to understand the motivations, actions and nature of the Houthis — and instead treating them as puppets of a foreign power — lays the groundwork for flawed decision making; one cannot expect to effectively counter an adversary without understanding how and why they fight. The Trump administration’s erroneous framing of the conflict thus represents a significant danger: for instance, the failure to understand the Houthis, their motivations and how they consolidated their power in northern Yemen renders it all the more difficult to exert political, diplomatic or even military pressure on the group.

Proper foreign policy regarding the Houthis requires a deeper understanding of how the group functions. For instance, the Houthis have been able to continue prosecuting the conflict not because of Iranian support, but rather through their ability to capitalize on tribal networks under their control, their knowledge of the terrain, their control over key military installations and, increasingly, conflict-enabled revenue streams. Indeed, rather than being beholden to Tehran, numerous western diplomats having stated that when the Houthis entered Sana’a in September 2014 they did so against the advice of Iranian officials.34 Then in March 2016, the Houthis engaged in direct talks with Saudi officials that led to a de facto ceasefire along the Saudi-Yemeni border. The border ceasefire largely held until the breakdown of UN-sponsored peace talks in Kuwait in August 2016. Recent events surrounding Saleh’s death undoubtedly complicate peace efforts – among other things adding to the distrust between the Houthis and Saudi-led coalition members. Nonetheless, both the Houthis and Saudi Arabia are surely aware that any eventual sustainable peace agreement it will require the other’s buy in.

Thus, overemphasizing the Houthis’ foreign ties while ignoring local factors and the means of weakening or pressuring the Houthis is ultimately likely to breed policies that are ineffectual at best, and counterproductive at worst. This is particularly true with regards to the risk that the “pawn of Iran” framing becomes a self-fulfilling prophecy – that is, creating circumstances that prompt or even oblige the Houthis to further strengthen ties with Iran, or vice versa. In some regards, this has already been seen since the Saudi-led coalition launched its military intervention in Yemen in March 2015, under the name Operation Decisive Storm. According to a variety of western and Yemeni officials, following the coalition’s intervention Iranian support to and coordination with the Houthis expanded. Indeed, the Houthi reliance on this support increased as international isolation left them with few other potential partners.

US policy that casts the Houthis as an extension of Iranian interest will likely only lend momentum to this Houthi drift toward the Iranian sphere of influence. First, it would further isolate the Houthis internationally and continue to weaken incentives against greater cooperation with Iran. Second — and perhaps most importantly — it would increase Tehran’s incentives to expand its activities in Yemen.

At the moment, Iran’s involvement remains low-cost in large part because Yemen is not a priority for Iran, and as the Houthis remain generally autonomous and self-sustaining. While Iranian support for the Houthis does appear to have aided the group and, it would seem, their ballistic missile capacity in particular, this aid has not shifted the balance of power in the conflict, with the frontlines in Yemen having remained largely a grinding military stalemate since 2015.

However, a US policy that aims to “hit Iran in Yemen” may ultimately shift the Iranian government’s calculus with regards to Yemen’s importance. In short, if the US government sees the Houthis as a proxy target for Iran, Iranian military planners would be highly incentivized to back the Houthi much more substantially, given that the Iranians would have little to lose themselves, while their opponents – the US and Saudi Arabia – would have a great deal at risk. Iranian media and government statements already frequently highlight the US role in facilitating the Saudi-led coalition’s actions; increased US involvement would thus not only be a propaganda coup, but would bolster within the Iranian regime proponents of increased support for the Houthis.

Trump’s stance against the Houthis also threatens to bury the already moribund UN-led peace process. While the United States government has taken a firm stance in favor of the Saudi-led coalition and restoring the internationally recognized government, Washington has nonetheless been a key supporter of the peace process; notably, under the waning days of the Obama administration senior US officials exerted significant pressure on the Saudis and Emiratis to push President Hadi and his allies to agree to a peace settlement.

Since Trump took office, the peace track put forward by John Kerry was effectively put on pause, as key members of the coalition aimed to take advantage of the new administration’s more favorable leanings. Trump’s consistent framing of the Yemen conflict as the product of Iranian malfeasance reduces Washington’s ability to pressure allies back to the negotiating table. Additionally, it reduces the US’ ability to coordinate with other allies. Europe, and even the United Kingdom, have widely divergent understandings of the Yemen conflict from Trump’s. This will impede the international community’s efforts to maintain anything resembling a united front, thus weakening its leverage over Yemen’s various warring factions.

Domestically in the US, criticism of the Trump administration’s policies regarding Yemen – including many that are roughly consonant with Obama’s – has become increasingly mainstream in many Democratic party circles; Moveon.org, for example, has recently sponsored numerous petitions critical of US support for Saudi-led military coalition operations in Yemen.35 US involvement in the Yemen conflict has also faced increasing criticism from Republicans. This comes notably from the GOP’s anti-interventionist libertarian wing and figures such as Representative Walter Jones (R-NC) and Senator Rand Paul (R-KY), who similarly opposed US intervention in other regional conflicts. Such figures have succeeded in generating across-the-aisle support in a series of bipartisan attempts to call attention to the war and limit the US’ involvement. In doing so, Republican politicians like Paul have made public statements consistent with those of the Democratic party’s progressive wing.

For instance, in speaking to the Yemen conflict, Senator Paul remarked in an interview with Breitbart:

That’s a whole new separate war, it’s not connected to any of the other wars. And I think there is a strong argument to be made that if we further the chaos in Yemen and we take one side against another, we make it to such an extent that a vacuum develops and Al Qaeda steps into that vacuum. I think there’s a chance. One, it’s not our war. We should vote on it, and there’s not a vital interest.36

Such bipartisan action is likely to deepen should Trump increase US involvement in Yemen. Indeed, GOP dissent has spread to less likely figures such as Senator Todd Young (R-IN), an otherwise mainstream Republican who has lead congressional criticism of the Saudi-led coalition on humanitarian grounds.37 That being said, a general Republican revolt against Trump over an escalation of the war is unlikely, given that the party’s grassroots seems largely uninterested in Yemen.38

Adam Baron is director for research and analysis and a co-founder of the Sanaa Center for Strategic Studies, as well as a visiting fellow at the European Council on Foreign Relations.

Waleed Alhariri is director of the United States office of the Sana’a Center for Strategic Studies.

Anthony Biswell is an assistant editor and researcher at the Sana’a Center for Strategic Studies.

This report was edited by Spencer Osberg

Notes

The Joint Comprehensive Plan of Action (JCPOA) is an agreement that was reached between the P5+1 (China, France, Germany, Russia, the United Kingdom and the United States), the European Union (EU) and Iran on July 14, 2015. While the deal is complex and technical, essentially Iran agreed to severe restrictions on its nuclear program that preclude it from obtaining nuclear weapons in exchange the US and EU lifting economic sanctions; During his visit to Saudi Arabia on 20 May, Donald Trump condemned the role of Iran, “From Lebanon to Iraq to Yemen, Iran funds, arms and trains terrorists, militias and other extremist groups that spread destruction and chaos across the region,” see:

As noted on the final report of the UN Security Council Panel of Experts on Yemen, “the deal allowed two Yemeni and Iranian companies, Yemenia and Mahan Air, respectively, to operate 14 flights per week per country. The first Iranian flight landed in Sana’a on 1 March, and a second on 6 March, beginning a series of flights that continued until 26 March, when the coalition imposed an air blockade.” See “Final report of the Panel of Experts in accordance with paragraph 5 of resolution 2204 (2015),” United Nations: Security Council, January 22, 2016, available at https://www.un.org/sc/suborg/en/sanctions/2140/panel-of-experts/reports

Associated Press, ‘Yemen’s Houthi rebels have released 2 Americans, John Kerry says’, October 15, 2016. Accessed December 17, 2017; available at http://www.latimes.com/world/la-fg-yemen-houthi-releases-two-americans-20161015-snap-story.html; Matthew Rosenberg and Kareem Fahim, ‘2 Americans Among 6 Hostages Freed in Yemen After Months of Captivity’, New York Times, September 20, 2015. Accessed December 17, 2017, available at https://www.nytimes.com/2015/09/21/international-home/2-american-hostages-freed-in-yemen-after-months-of-captivity.html

Author interview, US official, February 2012.

Kathleen Hennessey, “In deivising a plan for Iraq, the US looks to its Yemen model,” The Los Angeles Times, June 22, 2014, http://www.latimes.com/world/middleeast/la-fg-obama-iraq-yemen-20140622-story.html

For a write up of Zakani’s remarks, see “Sanaa is the fourth Arab Capital to join the Iranian Revolution, The Middle East Monitor, September 27th, 2014, https://www.middleeastmonitor.com/20140927-sanaa-is-the-fourth-arab-capital-to-join-the-iranian-revolution/.

Text of the “Iran Nuclear Agreement Review Act of 2015” is available at https://www.congress.gov/bill/114th-congress/house-bill/1191/text

The US Congress allowed the deadline to re-impose Iran sanctions to pass on December 13, 2017 without taking action. For more on this, please see Patricia Zengerle, ‘U.S. Congress to let Iran deadline pass, leave decision to Trump’, Reuters, December 12, 2017, available at https://www.reuters.com/article/us-iran-nuclear-congress/u-s-congress-to-let-iran-deadline-pass-leave-decision-to-trump-idUSKBN1E62HP?il=0

The White House, ‘President Donald J. Trump’s New Strategy on Iran’, October 13, 2017. Accessed December 17, 2017; available at https://www.whitehouse.gov/briefings-statements/president-donald-j-trumps-new-strategy-iran/

Author interviews, Washington, DC, July 2017. US government sources put the number of Iranian “advisors” present in Yemen in the dozens.

James Zumwalt, “Zumwalt: As Trump visits the Saudis, Yemen comes into focus to check Iran,” Breitbart, May 17, 2017 http://www.breitbart.com/national-security/2017/05/17/zumwalt-trump-yemen/

The White House, ‘Statement by President Donald J. Trump on Yemen’, December 6, 2017; accessed December 19, available at https://www.whitehouse.gov/briefings-statements/statement-president-donald-j-trump-yemen/

Throughout their alliance with the late Ali Abdullah Saleh, the Houthi leadership sought to protect the group and its political future, knowing Saleh would likely abandon the alliance if it was in his and his family’s interest to do so. Despite the formation of joint governing institutions, the Houthis refused to dissolve the Supreme Revolutionary Committee (SRC) headed by Mohammed al-Houthi. The SRC represented an effective insurance policy against Saleh. The Houthis’ suspicions were proved right when Saleh announced his willingness to open a “new page” with the Saudi-led coalition and confront the Houthis.

Robert Naiman, “Force House vote on Saudi war in Yemen to stop cholera and famine,” Moveon.org, https://petitions.moveon.org/sign/house-back-un-call-for

Matthew Boyle, “Exclusive: Rand Paul on Afghanistan and Yemen: Trump should trust his instincts and stop listening to generals who talk in his ear,” Breitbart, September 15th, 2017, http://www.breitbart.com/big-government/2017/09/15/exclusive-rand-paul-on-afghanistan-yemen-trump-should-trust-instincts-stop-listening-to-generals-who-talk-in-his-ear/

Former Yemeni President Ali Abdullah Saleh’s killing last week reverberated throughout Yemen and the wider region. As the most dominant figure in the country for more than 30 years, the implications of his demise are formidable. To garner a deeper understanding of how the outlook has changed for the ongoing conflict and the country in general, the Sana’a Center asked seven experts on Yemen for their insight.

At a time when the Houthi military’s grip on Sana’a has tightened – along with increased arrests, killings and censorship of social media and the internet – Houthi flirtations with external powers are noticeably different. The day after Saleh’s death, the head of the Supreme Political Council, Saleh al-Sammad, stated that the Houthis are willing to negotiate with Saudi Arabia.

While ostensibly this may seem to indicate a willingness to reach compromise to end the war, after gaining undisputed control over Sanaa any settlement the Houthis would accept would have to provide them political cover for their continued de facto rule.

If Saudi Arabia came under significant pressure from its Western allies then it would likely accept a political solution that could theoretically allow it to save face. While coalition-backed military operations on Yemen’s western coastline will probably not proceed inland, the blockade on Sanaa and Houthi-controlled areas will intensify. Meanwhile, the resulting human suffering will not put pressure on the Houthis but backfire on the coalition, especially Saudi Arabia.

A settlement, therefore, may yet be forthcoming, but the country has become divided along sectarian lines in an unprecedented and explosive way, and is unlikely to stabilize in the near future even after the regional intervention is over.

As for the wishful hopes of a popular uprising, people are unlikely to mobilize while exhausted, hungry and under severe Houthi oppression. War has weakened people’s capacity for resistance, especially in the absence of any leadership or organization. Furthermore, the Houthis, while still young and cohesive, may soon suffer the corrosive effects associated with absolute power, such as complacency, opportunism and of course corruption. Such hubris would erode whatever remains of the Houthis’ internal moral legitimacy, at which point their opponents will have an opening.

Ali Abdullah Saleh’s death on December 4, 2017 marks the end of an era for Yemen, and indeed for the region as a whole. He was the last of the Arab nationalist leaders. Whatever views one may have about his politics, Saleh demonstrated extraordinary political manoeuvring skills over more than 30 years and ended up as the longest serving leader of the country in modern history. Not only did he negotiate the complexities of Yemen’s social structure – facilitating the rise and fall of different social classes, non-tribal elements, various tribes and the Hashemites – he also navigated the management of a republic in the Arabian Peninsula where absolute monarchies prevail. He did so while retaining nationalist credentials against the rising tide of Islamism in the region, and balancing relations between East and West during the Cold War. Finally, in the post-Cold War era, he successfully ensured Yemen had a significant degree of independence from United States domination while giving the impression of supporting its ‘war against terror’ from 2001 onwards. His ability to manage these highly contradictory and conflicting interests deserves respect and even admiration.

When Saleh became president of the Yemen Arab Republic (YAR) in 1978, following the assassination of two of his predecessors, he was not expected to last more than a few weeks. Initially described as a semi-literate country bumpkin, he soon demonstrated that literacy and formal education are not necessarily indicators of political competence and cunning. It is now many years since I heard anyone mention his lack of academic qualifications. He not only lasted, but increased his grip on the country and demonstrated that being semi-literate did not prevent him from being an extremely sharp and effective operator: his prodigious memory for people’s names, faces and personal histories was often mentioned as one of the explanations for his success.

In the early years of his presidency, he survived not only attempts on his life, but military defeat in the 1979 war against the PDRY. In 1982, he created the General People’s Congress (GPC): this quasi-party brought under a single umbrella influential people of all political hues requiring only one thing, loyalty to himself, in exchange for practical benefits which they could use themselves or for their communities and followers. At a time when political parties were illegal, it was an institution which mobilised support while neutralising most opposition, as he brought into it many opponents, including members of the National Democratic Front who had benefited from the support of the PDRY in the 1979 war.

After 1990, the GPC survived and thrived in the united Republic of Yemen where it became a formal political party and expanded into the southern governorates. Its lack of a clear political programme was not a hindrance to its development as it was primarily a tool of Saleh’s patronage system, used to distribute benefits as necessary. Indeed, other rulers have copied the model, Sudanese authorities, for example, didn’t even bother to change the name.

Had he retired gracefully in 2012, perhaps more people would remember some of his achievements, such as unification and the modernisation of Yemen’s infrastructure. Instead, his anger and frustration at being ousted led him into a particularly unsavoury alliance with his former enemies, the Houthis, in which he was gradually weakened and eventually lost his life. Since the Saudi-led coalition’s intervention in March 2015, his role also contributed to destroying much of what he had built in the first place, whether infrastructure or a degree of national cohesion in some parts of the country at least.

Saleh was a determining element of the lives of all Yemenis and, indeed, most foreigners involved with Yemen for decades. The mass demonstrations held in August to mark 35 years since the establishment of the GPC proved that he still had very impressive popular support in the country, despite the negative aspects of his rule. His legacy will continue to affect Yemeni politics and society for some time to come.

Jamila Ali Raja | Yemeni Diplomat and director at Consult Yemen

Houthi empowerment

Regardless of the shock, disgust and anger that accompanied Saleh’s brutal death, it will not have a significant impact on the likelihood of reaching a peace agreement and ending the war in the short term. This is because the Houthis are the party primarily responsible for stalling political and diplomatic negotiations since the end of the last round of UN-sponsored peace talks in Kuwait over a year ago. No progress has been made since, despite UN Special Envoy to Yemen Ismail Ould Cheikh Ahmed’s many efforts. Now, following Saleh’s death, the Houthis have complete control over state institutions, revenues, and decision-making in the country’s north.

Houthi euphoria at their victory over the ally of yesterday and the enemy of the distant past is apparent in their public rejoicing for finally avenging their slain founder, Hussein Badr al-Din al-Houthi. The Houthi movement and its militias will continue to create a police state that suppresses any dissenting political expression. Despite their expressed willingness to return to “peer” negotiations, as stated by the head of the Supreme Political Council, Saleh al-Sammad, the group’s military leaders will make sure to thwart this path.

The Houthis are betting on there being no decisive military victory, given the enormous humanitarian cost that such would entail, and which the international community would not allow. Already the escalation in Saudi-led coalition airstrikes in Sana’a and other areas following Saleh’s death have raised concerns among the coalition’s Western allies.

On the military level, regardless of the unknown fate of Saleh’s nephew, Tariq Mohammed Abdullah Saleh – and the signs suggesting that he is still alive – there is a growing expectation that the remaining members of the Republican Guard will join the Houthi militias, perhaps with the exception of those in Taiz. Meanwhile, the military situation has changed little on the crucial frontlines in Nihm and Mokha districts, in eastern Sana’a and western Taiz, respectively, despite pro-government forces making gains in Al Khawkhah, Marib and Shabwa.

The Houthis are also betting that the citizens and tribes under their rule will be more amenable to following them after Saleh’s death. The south is no longer the focus for the Houthis, but they share with many southern leaders a desire to turn the page on the internationally recognized Yemeni President Abdo Rabbu Mansour Hadi; this includes, perhaps, dividing Yemen into two regions or two countries.

Meanwhile, Saleh’s General People’s Congress (GPC) party appears headed for a crisis. Its movements, meetings and statements herald a split within the GPC, between factions on the ground in Yemen (particularly Sana’a) where the party members will have to ally with the Houthis, and another abroad, notably in Riyadh, given ongoing political maneuverings there. A possible third branch might also emerge, a development being expressed by the GPC-affiliated Yemen Today TV channel, which is now broadcasting from Sanaa, Cairo and Riyadh. Concurrently, the status of Ahmed Ali Saleh, the son of the late president, is still under discussion in the United Arab Emirates, in the presence of other parties from Cairo and Riyadh.

It remains unclear to what extent the Houthis are able to fund their war sustainably after Saleh’s death. During his 33 years in power, the former president created a huge patronage network that enriched his allies and, of course, the president himself. A large amount of the money made from graft was stowed abroad in tax havens and secret jurisdictions, hidden behind shell companies and trusts. From the beginning of the war, Saleh and his inner circle were able to access these funds, probably billions of dollars’ worth.

Since the beginning of the civil war in late 2014-early 2015, a United Nations Panel of Experts has identified tens of millions of dollars belonging to Saleh’s family, and the transfer of funds within his financial network. Khaled Ali Abdullah Saleh, the former president’s son, is said by the UN Panel to have laundered almost $84 million through a bank account in the UAE over the course of a week in 2014, while a reputed Saleh ally, businessman Shaher Abdulhaq, was found to have transferred around $3 million dollars to Raydan Investments Limited, another Saleh family-controlled financial vehicle.

The Houthis claim to have seized large sums of money and gold from the homes of the former president and his family, and say that they will transfer the funds to the Central Bank of Yemen (CBY) branch in Sana’a to pay wages – likely those of fighters rather than civil servants. But this will be a one-off cash injection. With the coalition working to squeeze the northwest of Yemen even harder now that the Houthis are in sole charge in Sana’a, and with cash transfers from Iran under growing scrutiny and access to Saleh’s international financial networks cut off, it is unclear how well placed the group is to sustain itself financially. The Houthis have consolidated control over customs and tax authorities, and are the main beneficiary of inbound smuggling routes, but running a war is expensive.

Ali Abdullah Saleh was a true dictator, and after three decades as the most influential man in Yemen, the wheels he set in motion and how he met his end will shape the country far into the future.

The Saleh era was a naked expression of realpolitik, defined by his ruthlessly pragmatic political maneuvering aimed at, above all, preserving his own authority. As opposed to furthering public interests Saleh – one of shrewdest Arab politicians of the modern era – managed to radically transform a country as complex as Yemen to serve his bidding.

From the reigns of power he was constantly in conflict with the common people and effectively crushed their dreams for a better life, and then departed this world without being held accountable for the suffering he sowed. And yet many in the country grieved for his death, even some of his fiercest opponents; first, because they had hoped he could save them from the Houthis; second, because of the brutal way he was killed.

The impact of Saleh’s death will be felt most in the unravelling of the networks of interests which he used to preserve his power, such as those embodied in the General People’s Congress (GPC) party. In Saleh’s absence, the GPC is likely to disintegrate. Neither Saleh’s son, Ahmed, nor any of Saleh’s family members can compensate for his loss, despite their highly symbolic status in the eyes of GPC supporters. The GPC needs more than just symbols now; to survive the party needs a leader with personal dynamism, effective presence, and the ability to build alliances, stake calculated positions and exploit prevailing circumstances.

It is difficult to foresee any party inheriting his legacy and authority, including the Houthis who cut him down. Replacing Saleh will require more than brute force alone.

Iona Craig |Freelance journalist and Orwell Fellow

Checkmate for the master

Saleh was, to the end, perceived in Yemen as the master game player. He loved Yemen’s often-deadly political contest and played it by rules that he himself established over more than three decades as president. When I met him after he ceded the presidency to Hadi in 2012 it was clear that, despite his claim of being a retiree from politics, the playing political game impassioned him as much as the power and money it had provided him with for so many years.

In our meeting he swung from moments of anger to the point of rage and then laughter when I mentioned his son, Ahmed Ali, in the same sentence as his erstwhile ally-turned-opponent, Ali Mohsen al-Ahmar. When he stated that the memoirs he was supposedly penning would not be published until after his death, because they contained too many secrets, I asked if people should be afraid of the day he died. Saleh’s eyes lit up at the thought as he responded through a chilling cackle: “Inshallah,” he said, God willing.

In the aftermath of Saleh’s death – the circumstances of which demonstrate that he had been superseded as the linchpin in his own handcrafted stratagem – the Houthis are creating new rules of the game. Most immediately, the Houthi campaign of arrests, purported killings and the shutting down of internet access indicate they are turning Sana’a into what looks and behaves troublingly like a mini police “state.” What happens next in Yemen throws up a myriad of possible scenarios, none of which look positive. A week on from Saleh’s death and the tone the Houthis have set so far is an ominous one for the capital’s residents.

In the longer view, I wonder how Yemeni history will come to record Saleh’s killing. Will his death at the Houthis’ hands somehow absolve him of responsibility for starting the war? That will likely depend on who gets to write that history and under whose authority it will be taught to Yemen’s future generations. Many in the country, particularly those in the south, would argue that he got his comeuppance. What is beyond doubt, however, is that the millions of Yemenis who have outlived Saleh are now left to burn in a living hell of war, famine and disease, and that Saleh played an essential role in the creation of this tragedy.

Dr. Abdulrahman al-Saqqaf | Secretary General of the Yemeni Socialist Party

International community must act to avoid disaster

Prior to the killing of former Yemeni President Ali Abdullah Saleh, Yemen was faced with three possible scenarios: continued civil war; a de facto partition that is not fully recognized by the international community; or increased momentum to resolve the war through a peaceful resolution.

This last scenario is the least likely of all three at the moment. The likeliest scenario is one where partition occurs amid a civil war that can only be brought to a close if there are cohesive local, regional and international peace efforts.

This requires the international community and regional actors engaged in the war to abandon their reluctance to end the war. Time is not on the side of a solution, and its passage carries serious risks to peace in the region and internationally given Yemen’s strategic location.

Much of the Yemeni population faces frequent exposure to serious stressors, harm and trauma, whether from food insecurity, unemployment, cholera, arbitrary detention, torture, indiscriminate attacks, air strikes, or weak to non-existent basic public services. The ongoing conflict in Yemen thus has immediate implications for the mental health and well-being of Yemenis.

Taiz city and the wider governorate have been an active frontline in the Yemeni conflict for more than two and a half years. Fighters from the Houthi movement and allied forces of former President Ali Abdullah Saleh first stormed Taiz in early 2015, with local resistance groups soon taking up arms against them. Fighting has raged since, with the anti-Houthi forces receiving nominal support from the internationally recognized government of Yemen and the Saudi-led military coalition backing it.

Ali al-Mamari, an esteemed former member of the Parliament of Yemen, became the official local government representative of Taiz in 2016, when President Abdo Rabbu Mansour Hadi appointed him governor of Taiz.

Al-Mamari was in Beirut, Lebanon last month and spoke at an event entitled “The Paths of Conflict in Yemen and Opportunities for Peace”, co-hosted by the Sana’a Center for Strategic Studies and the Issam Fares Institute for Public Policy and International Affairs at the American University of Beirut on October 16.

During a question and answer session with Sana’a Center Chairman Farea al-Muslimi, al-Mamari spoke about the political, strategic and economic importance of Taiz. In particular, he described how Houthi-Saleh forces have used industrial areas around the city as a source of revenue generation, and thus why they have made such heavy troop commitments to try and hold these areas.

Al-Mamari spoke about the devastating siege Houthi-Saleh forces applied for more than a year on government-held areas of Taiz city. During this almost total blockade and constant shelling, he outlined how food, water and access to healthcare ran scarce, the collapse of the local economy and how the inability to dispose of waste created dire environmental hazards.

The Yemeni government and its coalition partners have also heavily neglected Taiz, said al-Mamari, pointing to the lack of funding that has caused public services to deteriorate and led to the absence of police and security on the streets in government held areas. In particular, he said the governor of the Central Bank of Yemen has made it a point to obstruct financial support from reaching Taiz.

Al-Mamari said military support for the local resistance has also been vastly inadequate, with anti-Houthi fighters being left heavily disadvantaged against the Houthi-Saleh forces’ better armed and better trained brigades. Al-Mamari said in large part this is due the United Arab Emirates, which has curtailed military support to Taiz due to fears it may aid the Islah Party, affiliated with the Muslim Brotherhood in Yemen; al-Mamari insisted these fears are overblown.

In an exception to this rule, however, the UAE has provided the Abu al-Abbas brigades in Taiz special treatment, said al-Mamari, which has led to divided loyalties amongst anti-Houthi forces. Notably, the UAE, whose affiliated forces seized control of Mokha Port along Taiz’s Red Sea coast in early 2017, has refused to relinquish control of the port and even denied al-Mamari permission to visit it.

The following is a translated transcription of the conversation between al-Muslimi and al-Mamari, edited for clarity and length:

Farea al-Muslimi:First, what has hampered the battle for Taiz?

Second, I know you have submitted your resignation on more than once – indeed, the president rejected your resignation just two days ago – and that one of your biggest concerns was the need to pay public sector employee salaries. Could you provide… insight into the situation in Taiz, especially economically and militarily.

Governor Ali al-Mamari: As for the question why was the battle for Taiz has been hampered, there are many factors. As I noted earlier, Taiz has been a driving force for change and its peoples have been leaders at critical junctions in Yemen’s modern history. The sons of Taiz had an important role in the September 26 [, 1962, Republican] Revolution. Among those who were harmed by this revolution were the Houthis, and this is why they have a true vendetta against Taiz city. Then came the events of February 11, [2011 uprising] which eventually led to the departure of Ali Abdullah Saleh and his regime. The two, the Houthis and Saleh, are now joined in a battle against the sons of Taiz in a personal vendetta against the city.

Prior to February 11, [2011] there were already 11 significant military brigades stationed around the city – such as those stationed at the Khaled bin al-Waleed camp, which fell recently and is a camp of a similar importance to that of the al-Anad Camp in the south. These brigades, such as those commanded by Abdullah al Kadhi that were loyal to Saleh, surrounded the city to ensure it did not revolt. Saleh understood the danger of the city and that it wouldn’t remain patient forever.

Thus, when the Houthis and Saleh initially besieged Taiz it was besieged by all of these brigades, including members of [Saleh’s] special forces and military police. The concentration of these forces around the city made a swift liberation very difficult.

The resistance in Taiz was initially formed by untrained young men who are not battle hardened; teachers, doctors, pharmacists, skilled workers that were forced to defend themselves, their families and their city… Thus, the resistance had inadequate training, as well as armaments.

Imagine, today we are conducting a battle along hundreds of kilometers with only 10 old tanks. A war of these dimensions with 10 tanks… while Houthi-Saleh forces have hundreds of tanks in camps located in western Taiz. Hence, the military balance is tilted towards the Houthis and Saleh…

Another reason, is the [Saudi-led] coalition. I think that the coalition believes that Taiz has more of an Islah presence [than it actually has], and thus it is not in the interest of some coalition members for the battle of Taiz to be won by Islah, [as they believe] that would strengthen it. A particular coalition member sees Islah as an adversary, even though we reiterate the point that there is no one individual, group or party in Taiz that could dominate or control Taiz. All of the sons of Taiz have fought in the national armed forces, including members of different parties and affiliations.

No one can claim that one party is in control or has superior power in the city, but this is the fear and anxiety of one coalition member that is responsible for the fourth [military] district [which includes Abyan, Aden, Dhalea, Lahj and Taiz]. Our Emirati brothers are the ones overseeing the battle and supplies in the fourth district, which includes Taiz. This fear means the supplies reaching the national armed forces are just for sustenance. They are not provided the capacity that could enable them to achieve significant battlefield victories. They [the UAE] are not in a hurry. Maybe one of their objectives is to try and make sure all warring parties are eventually exhausted so the governorate becomes easier to control.

When the Houthis attempted to control Taiz they did not dare enter the areas that are highly populous and highly educated, such as Maafir, Mawaset, Shamatein and Jabal Habashi. They positioned themselves in coastal districts, and while they control 75 percent of Taiz, these areas have a lower population count and a lower level of education.

The Houthis concentrate on areas around the city with high economic activity for tax collection, such as the industrial area called Hawaban. The factories [there] provide an annual revenue of around 25 billion Yemeni rials (YR), or around $50-60 million (US). This area of economic activity, where the 22nd republican guard brigade is based, has always been controlled. The Houthis are fighting there so as not to lose this revenue. Towards the west of Taiz city there are factories such as al-Shaybani as well as the paint and soap factories, among others. The Houthis allocated their best forces, arms and equipment towards these areas because they know for certain that if they were to lose control they will suffer. This is one of the reasons why it is not easy for the national armed forces to progress in Taiz, because it is home to important areas for the Houthis and Saleh.

As for my resignation, I’ve said that the issue in Taiz is that while his excellency the president, and other esteemed ministers, are responsive and give orders whenever we go to them, we then find that many of those orders are obstructed by bureaucracy and low-level employees, especially at the central bank in Aden.

I remember a cabinet meeting I was invited to that related to the 40 billion in Russian-printed Yemeni rial sent to Aden airport. I heard the ministers talk about how the money should only go to liberated areas. I said at the time that this money belongs to all Yemenis, and it’s not right to consider only spending it in liberated areas. At the end of the day, this is an obligation of the Yemeni state towards its citizens across all of Yemen.

There was contention around this point. When it came to the distribution of security salaries in Taiz, my colleague, the minister of the interior, said salaries should only be given to those affiliated with the legitimacy, to which I said that a security officer’s salary is a right that does not relate to the conflict.

We were very careful to get salary disbursements for all the sons of Taiz. We have 54,000 public employees in Taiz, and we disbursed salaries across all districts, whether under the control of the legitimacy or Houthi-Saleh forces. Citizens do not deserve to be deprived of their salaries. A salary is a right and people should not be punished on the basis of party or region.

As for my resignation, we were promised the salaries for the sons of Taiz. When the central bank headquarters was relocated to Aden in October [2016] we demanded the salaries be paid… We kept struggling from October until March 2017, and finally in March we managed to obtain the salaries for the month of December 2016. But when we finally came to collect the salaries for December, we received only YR 3 billion, and only for the education sector. They refrained from allocating the YR 750 million for other sectors, including the health sector.

In July this year I met the president and gained a clear order that Taiz was to be placed on an equal footing with liberated areas such as Aden and Shabwa, which now receive [public sector] salaries on a regular, monthly basis. In September, the moment arrived for the collection of August salaries, and the first transgression arrived when they told us to forget the salaries of August and to instead focus on the salaries for September. We agreed… When we arrived in September to receive the salaries, we were surprised that the governor of the central bank was refusing to disburse salaries for all sectors and was only approving salaries for the education sector.

I could not remain governor so long as people’s salaries and their rights were not being granted. After the resignation, the central bank disbursed one month’s salary for all employees across all different sectors in Taiz. We hope this month we will witness the same.

During the last week, after I submitted my resignation to the president, he summoned me to Riyadh and said that I must continue my work. I set a group of conditions to return as governor, regarding the liberation of Taiz, the central bank, salaries, and support for security services in Taiz.

Security services in Taiz are given no support. When the former director of security went to the Ministry of Interior in May to receive the operational security budget for Taiz he was surprised to find that the allocated budget for Taiz for three months was YR 1.9 million, the equivalent of $4,000 to $5,000 USD… $5,000 dollars as an operational budget for a governorate the size of Lebanon during wartime.

When we created a special forces [unit comprised of] 3,000 well-trained officers and a facility and military police camp for them we used funds from other budgets, including the health budget, not those allocated for security.

In short, the president insisted that I remain in my post and pledged YR 2 billion for security in Taiz as well as YR 5 billion from the central bank. These are presidential orders, and we will go to Aden, to the government or the central bank, and hope that these orders are implemented.

Regarding the economic and military conditions in Taiz, imagine when the public employees have not been paid for 10 to 11 months, with economic mobility in Taiz dependent on this money circulating into the economy. Shop owners are owed huge debts. As I noted, the factories are not under our control and must pay a high, 25 percent tax directly to the Houthis. Wholesale traders are outside the city, and after two and half years of conflict people have run through all their savings.

For those who may not know, Taiz was totally besieged for a year. Even water and air was restricted – oxygen tanks were not allowed in and as a result 15 Yemenis from Taiz died. The King Salman Center had to airdrop medicine and food into Taiz because it was completely under siege. Regarding water, there aren’t any water projects in Taiz. Water used to arrive through mobile water tanks from outside the governorate. When the siege was partially lifted life improved but the economic situation and conditions in Taiz are dire. Hundreds of thousands of city residents have been displaced to other rural areas and regions.

Militarily speaking the national army makes progress every day but it’s not the progress we anticipate or hope for. They are making slow progress. Although the battle is not immensely difficult it requires resources, such as armaments that the government doesn’t have. The coalition is the only source of military support. We try to apply pressure so that our brothers in the coalition provide more support… and try where we can to press the government, which is not very responsive to Taiz.

Al-Muslimi: Who has more space within Taiz to operate, you or Abu al-Abbas, and what is the scope of competition between armed groups and the local authorities, especially those formed as a direct result of the war?

Is support from the coalition channeled through you as the local authority or do external powers deal with different groups on the ground directly?

How do you run a governorate in a time of war and what about crisis management?

Al-Mamari: Of course the role of the local authority might be more war-oriented than development oriented. Throughout a year and half we only demanded salaries. We didn’t dare to dream of saying we need operational budgets for construction, water or electricity projects. At a time when people are not receiving their salaries, and we are unable to demand an operational budget. Our offices work at minimum capacity. Taiz is living through a time of war and so crisis management is the most prominent form of administration.

We do not have the budgets or capacities to initiate water or electricity projects. Sanitation projects are supported by UNICEF and others. The city is living through terrible environmental conditions. The city’s main landfill is in the west in the old airport district where the Houthis are. On numerous occasions we requested that they allow garbage trucks to reach the landfill. Initially, they would not allow any truck to return [from the landfill]. Now, in a small area of the city, all we have are water runoffs. We place the waste in the way of the runoff so that it’s taken by the water to unknown locations. We also burn waste. It’s a true environmental catastrophe in Taiz.

One of God’s blessings is that we discovered unused wells in different areas. People started using them with the help of Kuwaiti, Emirati and Qatari organizations, among others, that provided generators or subsidized fuel.

Regarding Abu al-Abbas, I believe that he listens to me as governor and complies but only insofar as it doesn’t cause friction between him and the UAE supporting him. The UAE provides adequate support to all brigades and the military leadership axis. Abu al-Abbas is an exception though as he is supported personally by the UAE. If you note the message that the Emirati commander sent to the military leadership axis, he saluted the leaders of the 22nd, 35th, 17th, 170th and Abu al-Abbas brigades. That was in the official memo that Al Jazeera and other websites circulated.

No one denies that Abu al-Abbas was among one the first to join the resistance and fight the Houthis in Taiz. He has personnel as well as arms and nominally falls under the [command of] the 35th brigade. Nonetheless, he receives special attention from our Emirati brothers. As I said, the support the coalition provides arrives through the military leadership axis to all brigades, except for Abu al Abbas to whom it arrives directly.

Initially, I could not leave the city of Taiz for a year before my appointment [as governor]. I could only leave for Aden on foot through the Mishraa and Hadnan district toward Mashrakh. Taiz city was totally besieged. There was no way of getting materials to the city, but after that we carved a path. If you could see how supplies used to reach Taiz, I think the prices of donkeys in Sabr reached YR 60,000 to YR 80,000, because the only way goods were able to reach the city was on the backs of donkeys.

This continued for six months, and while I was on my way from Sabr, I saw children in very sad circumstances. Imagine a child climbing a very steep 3 km to 4 Km incline for three to five hours with a box of food, juice, or flour on their back only to make YR 1,500 rials, or around $3 to $4.

We have seven public hospitals in Taiz city, and only three operate at minimum capacity. Schools were also devastated. At the beginning of this year, students began the school year in either destroyed buildings or ones with armed groups. Teachers are not available. The education sector has been completely halted because teachers did not receive their salaries for 10 months. Children are not going to school and the sick cannot find medicine or hospitals. It is disastrous in Taiz, and this hurts to say as a man of the governorate. But no one helps… the only aid is through the King Salman Center. But for a governorate of 4 million, no matter the amount of aid from the King Salman Center, it cannot cover all needs in the city…

To be honest, it has reached the point of feeling like you’re begging from the government. When the president, the prime minister and the governor of the central bank agree that you will receive YR 3.75 billion for people’s salaries, and then in the same day you disagree with them over the sum and complain. You deal with the president, the vice president and the prime minister… and eventually, they tell you that the governor of the central bank says there isn’t 3 billion. You feel like a beggar in their offices. I told [them] I’m not there to beg, I’m demanding people’s rights. This city is fighting on the behalf of all Yemenis, and for legitimacy. If this city were to halt the war, what legitimacy would you have left?

Al-Muslimi: Is Mokha Port under the control of the local administration?

Al-Mamari: The Mokha Port was liberated and UAE forces are there. Now you only have long range missiles striking from long distances. The UAE have positioned patriot batteries that prevent missiles falling on Mokha city.

The port will make a huge difference if activated. It could bring large revenues for the city that might alleviate our grievances – when we talk about hospitals, we are not talking about many millions of dollars; we said that with a few million dollars we can resolve the health or education issues in Taiz.

If Mokha Port is made functional it might resolve the economic problems in the city too. A month and a half ago I met with Saudi officials working on the Yemen file, specifically Taiz. I asked them for Mokha port to be activated, as businessmen in Taiz are prepared to send their goods and fuel through the port.

[But] the UAE still hasn’t transferred the port. The UAE has, however, done a great thing in Mokha. We had a 160 megawatt (MW) power plant in Mokha that was nearly totally dysfunctional due to the war, and they [the UAE] restored it with a capacity of 120 MW. It previously had four turbines, 40 MW each, and they activated three of them. The power from one turbine is used for lighting and other needs in Mokha, and the rest feeds into Taiz, though the electrical network was damaged during the war.

Eight months ago, though, when I went to inaugurate the power plant in Mokha and asked to visit the port, they declined. They said the commander wasn’t there.

Al-Muslimi:What are the coalition’s considerations, as far as you believe, or the UAE specifically, regarding the suspension of salaries. Do they think there is a possibility that salaries might go to Saleh-aligned fighters in other brigades? Do they believe this adds pressure to the battlefronts? For example, the Mokha Port, do they believe that this relates to smuggling, despite the fact that their forces are at the port?

Al-Mamari: The coalition and the UAE have nothing to do with the salary issues. The problem is with the governor of the central bank. From my experience with him, from when he was the Minister of Finance and until he became governor of the central bank, he puts obstacles in the way of anything related to Taiz.

Mokha is still a war zone and there is still fighting in the vicinity of the city. Let’s not exaggerate by saying if we receive the port it will be immediately functional. Not true. The area is one of conflict, and the UAE is present there. At the end of the day, the war is over a few areas… the UAE, Saudi Arabia, Iran and the US are all involved in a struggle over the strategic area [that includes] Mokha, Dhabab, Bab al Mandab. I do not think the UAE is providing all this support to eventually just say, “go ahead and take it.” It is more complicated than we think. It is possible for them to achieve their interests, and for us as well; however, the fact that I couldn’t enter the port was problematic.

For the record, Mokha port was subject to penalties for 35 years. It is an area of smuggling – of “parallel trading.” Ali Abdullah Saleh made billions of dollars from this area as he wanted this area to remain in the dark as a passage for smuggled goods, narcotics and all other prohibited materials. Yemen was a transit for these materials to Saudi Arabia and Gulf states. Mokha and its environs are underdeveloped because more development means a larger population and more monitoring. This is why for 35 years it hasn’t been functional.

Now we expect the Emiratis in Mokha and areas adjacent to Hudaydah. This has been the case for the past few months, as we anticipate a battle in Hudaidah through Mokha. We also hear that the UAE is interested in Mokha as it is located at the center of a triangle between Taiz, Aden and Hudaydah; and is close to the Bab al Mandab Strait. I think the UAE will stay there, but we say to them. “stay there but let us work.” We never asked for them to leave, but to only let the governorate benefit from the activation of the port and the generation of revenue for hospitals and education.

Al-Muslimi: Have you requested from the coalition any justification for striking civilians and civilian facilities in Taiz?.

Are needs in Taiz primarily in the humanitarian field, such as education and health, or in the security sector?

Al-Mamari: There is no doubt that humanitarian needs are grave, but over the past year the loudest voices in Taiz are asking us to save them from violent groups and other security issues. The humanitarian aspect is a severe need, but there were at least active hospitals and [humanitarian] organizations, but the security sector was nonexistent in Taiz. We have no active security institutions in Taiz. This is why people voiced their concerns over their security needs. The government is not paying attention to the security aspect, no organizations are helping either. There are many organizations helping with humanitarian needs, but regarding security concerns no one helps – not the coalition nor the government.

Regarding the issue of airstrikes in which civilians are killed, there is no doubt that in a war of this scale mistakes are made. We affirmed and condemned the mistakes made. The coalition is, however, cautious on the matter of airstrikes. For example, in Taiz there is an operations control room that provides coordinates to the coalition. Coalition aircraft do not target anything unless they’ve been given assurances and precise coordinates from the control room.

We’ve seen the facilities and buildings that are being bombed. The problem is not the coalition, it is those residing in these buildings – the coup forces. They remained in Sofitel for two years, and the coalition was reluctant to destroy this building. It would conduct airstrikes near it and people in Taiz would say on a daily basis: “Why don’t they strike the Sofitel building? Tank shells and artillery fire are killing our sons every day and they are reluctant to destroy the Sofitel building.”

The coalition used to say that, “if we strike Sofitel, they would say we are targeting facilities.” Eventually they struck it after people and the local authorities insisted. Houthi-Saleh forces take over institutions in Taiz and station their artillery and tanks in there and fire. In Taiz University, they took over the buildings such as the Faculty of Medicine and kept shelling the city. Eventually we said that people’s lives are far more important to us than buildings that can be reclaimed. [The targeting of facilities] does not happen until it these attacks are repeated for months. For example, Houthi-Saleh tanks kept shelling from the Sofitel building for two years.

There are even people in some control rooms across the republic that have personal issues. I heard that in Aden and Sana’a some people that had with a personal issue with a merchant or someone gave the coordinates of [that person’s] factory and it was hit. Even personal issues matter. At the end of the day, the coalition uses the intelligence it has, and the people in the army are not angels – there are many devils.

Summary:

Through October Yemen’s domestic currency, the rial (YR), lost almost 10 percent of its value relative to the United States dollar (USD) in market trading, dropping from YR 375 to the USD to YR 412. This drop was roughly equivalent to the loss in value over the previous six months and the second time in 2017 that the rial has experienced rapid devaluation.

As the Sana’a Center has previously documented, in the first half of February Yemen’s domestic currency lost some 20 percent of its market value. In both these instances, the authorities in Sana’a, (where the Houthi movement and the allied forces of former President Ali Abdullah Saleh hold sway,) and those in the southern city of Aden, (the de facto capital of Yemen’s internationally recognized government,) quickly implemented stop-gap measures to reduce the instability and slow the rial’s decline.

The latest currency instability highlights the continuing deterioration of the rial’s supports in the face of more than two-and-a-half years of civil war and regional military intervention, and has sparked widespread fears that the rial is on the cusp of further steep depreciation, and possibly hyperinflation. In a country that is overwhelmingly dependant on imports to meet the population’s nutritional needs – and which the United Nations has declared the world’s worst humanitarian crisis – the extreme loss of local purchasing power that hyperinflation entails would leave most Yemenis unable to buy food and other basic necessities.

Furthermore, Sana’a Center sources have confirmed that the authorities in Sana’a, in an effort to halt the rial’s depreciation, are preparing to impose a fixed currency exchange rate in areas of the country’s north which they control. While the Central Bank of Yemen (CBY) had previously maintained a fixed official exchange rate, CBY headquarters – relocated to Aden in September 2016 – announced in August this year that it would allow the domestic currency to float according to the market rate.

Should the authorities in Sana’a follow through on their plan and try to enforce a separate monetary policy, it would formalize the rupture of the CBY as an institution across the conflict’s frontlines. This formalization of North Yemen and South Yemen as distinct economic entities could represent a significant step towards the division of the country into separate statelets.

The Sana’a Center also foresees significant difficulties in operating one currency with differing monetary policy between the north and south. Separate monetary policies would likely precipitate a significant shift in remittances from Sana’a to Aden, incentivize massive currency smuggling between the areas, and shift ever greater financial flows away from the official economy.

Background

Over the course of more than two-and-a-half years of civil war and regional military intervention, Yemen has seen tens of thousands civilians killed and wounded, millions of internally displaced peoples, billions of dollars of damage to property and infrastructure, and the widespread collapse of economic activity, government services, security and humanitarian conditions. In specific regard to economic activity, the World Bank estimates that between 2014 and 2016 alone Yemen’s gross domestic product shrank 37 percent.1

The conflict has thus weighed heavily on the value of the Yemeni rial. Concurrently, the cessation of oil exports – previously the largest source of foreign currency and government revenue – has led to the depletion of foreign currency reserves and undermined the central bank’s ability to intervene to support the rial.

Yemen is overwhelmingly a cash economy, and the CBY has also been experiencing a severe shortage in domestic currency banknotes; in the third quarter of 2016 most public sector workers – roughly a quarter of Yemen’s employed – lost their income due to the CBY not having enough physical banknotes with which to pay them.2

In September 2016 President Abdu Rabbu Mansour Hadi, head of the internationally recognized government of Yemen, ordered the relocation of CBY headquarters from Sana’a to Aden. The central bank’s subsequent dysfunction further complicated the country’s fiscal and monetary management.3 Consequently, between early 2015 and November 2016 the rial lost more than half of its value relative to the USD.

Major currency instability in early 2017

Following the arrival of new rial banknotes from printers abroad in January 2017, the CBY in Aden began distributing public sector salaries. The market, however, quickly began to anticipate the injection of the full monthly public sector salary bill into the economy. Before the civil war began, this amount was roughly 65 billion rials nationwide, excluding the Ministry of Defence payroll. The market, aware that the central bank lacked the foreign currency reserves to support the rial, began short selling the domestic currency. This led to the rial’s market value diving as much as 20 percent in the first half of February.

In response, officials at the CBY in Sana’a convened meetings with private banks and financial institutions to coordinate currency stabilization efforts. Houthi-Saleh authorities forced currency traders to close and secured arrangements with major food and fuel importers to temporarily refrain from buying foreign currency from the market. In Aden, the CBY froze the distribution of public sector salaries, with the rial’s market value rebounding to YR 340 to the USD by mid-February.

Shortly thereafter President Hadi announced that the Saudi government had committed $10 billion in aid to Yemen – $2 billion of which would be direct currency support. The rial then experienced a gradual depreciation in market trading to YR 355 to the USD by end-March.

Precursors of renewed currency instability

The Saudi funding that President Hadi promised was not forthcoming, and to date has not arrived. Meanwhile, the intensifying war through 2017 has ensured that the rial has remained under downward pressure since the first round of currency instability in February.4

However, increased foreign currency remittances to Yemen for the month of Ramadan, which ran between May and June, and for the Eid al Adha holiday at the beginning of September, helped slow the rial’s decline. As is normal for the period following Eid al Adha, remittances then began to decline through September. The end of this support for the rial was shortly thereafter followed by a number of new downward pressures.

Importers, seeking to replenish stocks of goods following the end of the holidays, began selling their rials in the market to purchase foreign currency. In Sana’a, this trend was accompanied by a particular complication: to compensate for their inability to pay public sector wages, the authorities had, in the second quarter of this year, paid civil servants in vouchers that they could use at selected business to buy goods.5 To cover the cost of these vouchers, the CBY had digitally created some 45 billion rials that it lent to the authorities to pay the businesses. After Eid al Adha, these businesses went to the market with these rials to purchase foreign currency to restock their inventory. Given the liquidity crisis there is currently a premium for physical cash relative to bank transfers in financial transactions, thus increasing the cost for businesses buying foreign currency using these digitally manufactured rials.

On September 24, Prime Minister Ahmed Obeid bin Daghr of the internationally recognized government announced that it would begin regularly paying public sector salaries across all governorates under their control, as well as the entire Taiz governorate. The Sana’a Center estimates that the monthly public sector payroll across southern governorates, plus Taiz, is some YR 20 billion, in addition to more than YR 20 billion in salaries for the army and police. Following a shipment of newly printed rials from abroad in September, the government began distributing public sector salaries on September 29. Notably, there had been no increase in government revenue or foreign currency reserves that prefaced the increased government expenditure on salaries.

The cumulative macroeconomic effect of the above-mentioned events in September was a decrease in rial demand concurrent with an increased rial supply. Thus, at the beginning of October the rial then began to rapidly depreciate in market value.

The response in Sana’a

Through October Houthi-Saleh security services began arresting currency exchangers en masse in an effort to halt currency trading and speculation. (As of publication, most of the exchangers had been released from custody.)

On October 18, the deputy prime minister for economic affairs in Sana’a, Hussein Maqbouli, convened a meeting involving representatives from the National Security Council, the Saleh-allied General People’s Congress party, leading public and private banks, currency exchangers and major importers to discuss ways to halt the rapidly falling currency. (Notably absent from the meeting was a representative of the CBY in Sanaa.)

Following the meeting Maqbouli’s office released a six-point action plan. The first two points involved the parties committing to scheduling and facilitating the sale of foreign currency to the largest wheat and oil importers through CAC Bank, Yemen’s largest public bank. Specifically, fuel importers committed to immediately providing YR 6 billion to CAC Bank, which the bank would use to shop for foreign currency wholesale, rather than having the importers go individually to the market.

Points three and four of the action plan involved the implementation of currency controls. Specifically, the plan prohibits the exit of foreign currency from areas controlled by Houthi-Saleh forces – except with permission from the CBY in Sana’a – and bans the importation of large sums of rials from South Yemen, specifying that no one transfer should exceed YR 5 million.

In the action plan’s fifth point, banks, fuel importers, telecommunications companies, tobacco merchants and basic commodities traders committed to not purchasing foreign currency on the market until at least the end of October. The sixth point stipulated that the security services would pursue and punish those who violated any of the previous points.

The prospect of one currency with two monetary policies

According to Sana’a Center sources, the authorities in Sana’a are also planning to publically announce a fixed currency exchange rate, at below market value, in areas under their control, and force money exchangers and banks to adhere to such. While ostensibly a move to halt currency depreciation, if implemented the Sana’a Center foresees it having myriad unintended consequences.

Among the immediate impacts will likely be a large-scale shift in Yemen’s remittance deliveries from Sana’a to Marib and Aden, with senders and receivers alike seeking a better exchange rate for arriving foreign currency. Given that Yemen’s largest population centers are in the north, and thus the north will remain the final destination for most remittances, large-scale currency smuggling is likely to ensue in order to subvert the newly-imposed currency controls.

Throughout the conflict trust in the banking system has waned and its economic clout has in large part shifted to the currency exchangers, many of whom are semi-official or entirely black market entities. The empowerment of new currency smuggling networks would thus entail the continued decline of the official economy.

Marib, held by nominally pro-government groups yet less than 200 kilometers from Sana’a, would likely play a prominent role is such smuggling, given the pre-existing tribal dynamics of the area that are already facilitating rampant smuggling between Yemen’s north and south. As a result, Marib’s relative economic ascendency through the conflict – thanks to businesses and capital relocating there from Sana’a – would likely continue, and thus further empower the aspirations of Marib’s political elite for autonomy from both Sana’a and Aden.

Until its relocation last year, Yemen’s central bank had essentially been the last state institution truly acting as a national entity. The implementation of distinct monetary policy between the country’s north and south would formalize the schism of Yemen’s central bank. This creation of distinct economic areas would be in addition to the military and political division of the country, and thus should be understood as a significant step toward the creation of independent statelets.

A shared currency with distinct monetary policies, especially in the context of Yemen today, is also almost certain to wildly distort market mechanisms.

Government reaction to currency depreciation

October 21, Prime Minister Bin Daher called a meeting with the CBY in Aden and the directors of private banks in the city to discuss ways to stabilise the rial. Following the meeting the internationally recognized government implemented a number of new policies; among the most immediate was to prohibit large transfers of both foreign and domestic currency to northern Yemen, and to dispatch security agencies to force the closure of unlicensed currency exchanges in the governorate.

The prime minister also announced that the internationally recognized government would continue to purchase fuel from abroad for electricity generator consumption, and thus partially cover the market’s needs.

As of this publication, the market was trading the rial at between YR 406 and YR 412 – the buy and sell prices, respectively – to the USD. However, in anticipation of further weakness in Yemen’s domestic currency, and thus increased costs in restocking inventory, many Yemeni business owners were pricing goods based on an exchange rate of YR 500 to the USD.

Looking ahead: Recommendations

It is in the best interests of all Yemenis that the authorities in both Sana’a and Aden refrain from flooding the market with rials. Both parties must recognize that increased spending in the absence of increased revenue risks triggering rapidly accelerating inflation, which would have catastrophic implications for millions of Yemenis.

Both parties should also refrain from enacting policies that are deeply problematic for the banking sector – such as a fixed currency rate and currency controls between northern and southern Yemen.

The Yemeni government and members of the Saudi-led coalition intervening in the war must expedite efforts to restart Yemeni government revenue streams – such as natural gas exports through Bilhaf terminal in Shabwa governorate, currently under the control of United Arab Emirates-affiliated forces. In the interim period, the Yemeni government should also repatriate the foreign currency holdings it has abroad, which amount to hundreds of millions of dollars. Saudi-led coalition member states should also provide the CBY with foreign currency funds to prop up the rial, support the import of basic commodities and pay public sector salaries.

When conditions permit, it is incumbent upon the CBY to begin paying commercial banks the interest they are due on deposits held in treasury bonds. This would help re-empower the banks in the market again, allowing them facilitate normal business, play a role in stabilizing the currency, and help restore public trust in the banking system.

As previously detailed by the Sana’a Center, the CBY offices in Sana’a and Aden should coordinate to implement a dedicated exchange rate for humanitarian funds entering Yemen. This could be calculated using a moving average of the market rate of the previous three months. Given the size of foreign aid funds entering Yemen from international nongovernmental organizations and UN agencies, the use of such an exchange rate would help stabilize the domestic currency and the price of imports on the local market, as well as provide humanitarian organizations with a fair price for their foreign currency and curtail excessive arbitrage.

As the global currency authority, the International Monetary Fund should also bring its influence to bear on all parties in Yemen and the Saudi-led coalition regarding the above points.

4 The Yemen Protection Cluster – a coordination body for humanitarian organizations led by the UN High Commissioner for Refugees – reported in August that through the first half of 2017 the frequency of coalition airstrikes per month in Yemen had tripled, and the frequency of frontline battles had increased roughly 56 percent relative to 2016. For more see: Protection Cluster Yemen Situation Update August 2017.

The rise of Salafi militias in the Yemeni city of Taiz has contributed to the now frequent outbursts of violence there between ostensibly pro-government factions. It has also helped foster an environment conducive to extremist groups such as al-Qaeda in the Arabian Peninsula (AQAP). If not addressed directly, these developments are likely to continue destabilizing the city and wider governorate well after any potential resolution to the larger conflict in Yemen.

The disparity between the official exchange rate and the market exchange rate of the Yemeni rial that developed during the current conflict led to large-scale profiteering through currency arbitrage. In particular, Yemeni banks exchanging foreign funds for international humanitarian organizations reaped significant profits at the expense of the intended aid recipients in Yemen.

ince the administration of United States President George W. Bush, Washington has provided military assistance to the Yemeni government under the stated goal of bolstering the Yemeni Armed Forces’ capacity to combat Yemen’s local branch of al-Qaeda. This assistance was fairly consistently provided up until the outbreak of the most recent conflict in 2015, irrespective of the domestic upheaval taking place in Yemen.

Houthis’ missiles targeting Saudi Arabia became more developed and far-reaching during the current war, thus prompting questions about Iran’s role in Yemen. Many stories circulated about Iran smuggling weapons to Houthis despite the blockade and tight control on all air, land and sea ports in the country. It is also believed that Iranian experts are developing Houthis’ weapon capacities.

Since March 2015, Saudi Arabia and ten other countries have been conducting a bloody airstrike campaign against the Houthi rebel forces in Yemen. The campaign, meant to counter what Saudis call the “Iranian Threat” in the Arabian Peninsula, had received limited support from the Obama Administration, but Saudi Arabia and its coalition partners are now operating with a freer hand from the Trump White House.

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(SCSS) is an independent policy and research think-tank that provides new approaches to understanding Yemen and the surrounding region, through balanced perspectives, in-depth studies and expert analysis.